It is now illegal in Japan to offer contractors smaller allowances
The Tokyo High Court has ruled the gap in allowances, including severance pay, between contract and regular workers illegal.
Last week, a Japanese firm was ordered to pay two former contract employees a total of JPY 2.2million ($26,800) in allowances. This was the first ruling of its kind.
In 2017, one contract worker and three retirees had filed a lawsuit against Metro Commerce Co. for failing to pay about JPY 50 million in unpaid allowances and other compensation. The District Court dismissed their claims and only ordered Metro compensate about JPY 4,100 in overtime pay.
The former staffers appealed and upon investigation of each individual case, the High Court found the underpayments a violation of their Labor Contracts Act.
The court also emphasised that two of the retired contract employees had worked for about 10 years, calling it “unreasonable” to not pay them severance for their long years of service. It was judged that they should get at least 25% of the total amount of severance pay given to regular employees.
For the remaining staffers, the court ruled it illegal to avoid paying a housing allowance and other rewards given to regular workers despite working for over a decade. They were also ordered to pay the difference in a “premium rate” given to full-timers for working odd hours.
However, the judge dismissed requests for a correction of their basic salary and bonus packages, reported local media, the Mainichi.
